High Performance Work Practices

1 High Performance Work PracticesPenny TamkinPublished by:INSTITUTE FOR EMPLOYMENT STUDIESM antell BuildingFalmerBrighton BN1 9 RFUKTel. + 44 (0) 1273 686751 Fax + 44 (0) 1273 690430 2004 Institute for Employment StudiesNo part of this publication may be reproduced or used in any form by any means graphic,electronic or mechanical including photocopying, recording, taping or information storage orretrieval systems without prior permission in writing from the Institute for Institute for Employment Studies is an independent, apolitical, international centreof research and consultancy in human resource issues.

2 It works closely with employersin the manufacturing, service and public sectors, government departments, agencies,and professional and employee bodies. For 35 years the Institute has been a focus ofknowledge and practical experience in employment and training policy, the operationof labour markets and human resource planning and development. IES is a not-for-profit organisation which has over 60 multidisciplinary staff and internationalassociates. IES expertise is available to all organisations through research, consultancy,publications and the aims to help bring about sustainable improvements in employment policy andhuman resource management .

3 IES achieves this by increasing the understanding andimproving the practice of key decision makers in policy bodies and Performance Work Practices1 Summary1 What are they?2 How do they work?3 Link with business strategy5 What are the Practices ?6 What is the impact?8 The size of the effect9 Method issues10 Conclusion11 How might these Practices make a difference?11 Why a growth in HPWPs?11 Bibliography14 High Performance Work Practices1 High Performance Work PracticesSummaryThe question of whether the way people are managed and treatedat work contributes to the overall Performance of the enterprise,has been much debated.

4 The focus of this debate has tended to beon formal processes and procedures within organisations. Thesehigh Performance working Practices (HPWPs) have been thesubject of a wide range of studies designed to test their impact. The literature has shown that such Practices tend to be part andparcel of an approach that emphasises high quality goods andservices, and engaged and empowered workforces. Practicesstudied include those related to training and skills, participation,empowerment, and communication and compensation.

5 Thepractices themselves are believed by some to be additive ie themore the better but by others to work more effectively incombination. Some see these combinations as grouped intocoherent bundles of Practices eg Practices that act together toenhance employee skill or involvement, and others havesuggested that Practices need to fit with the business strategy ofthe firm eg skill enhancement Practices are best considered in anenvironment with high skill demands. There is now considerable evidence across a wide range of studiesthat adoption of these Practices is associated with good businessperformance.

6 Interpretation of the size of the effect is difficult asdifferent studies link different combinations of Practices anddifferent measures of Performance , but they suggest that as muchas 20-40 per cent of productivity differences between firms may beaccounted for by differences in HR Practices . Despite these strongassociations with Performance , estimates of uptake suggest thatless than a quarter of organisations adopt such Practices to anysignificant extent. Discussions of impact suggest that HPWPs act to improve the self-confidence and flexibility of the workforce and contribute toimproved motivation, morale and commitment which in turn arerelated to enhanced individual Performance .

7 Institute for Employment Studies 20042 What are they?High Performance work places or organisations (HPWOs) havebeen described in various ways, but there is a general emphasis onengaged and empowered workforces, and on high quality goodsand services. For example the OECD has defined them as thoseorganisations that are moving towards a flatter and lesshierarchical structure, where people work in teams with greaterautonomy, based on higher levels of trust and are similarly defined as those Practices which contributeto HPWOs.

8 In this paper we briefly examine the literature onHPWPs to answer five questions:z What are they?z How do they work?z How do they link with business strategy?z What Practices are used?z What is the impact?The CIPD has defined the component parts of high performanceworking as:z A vision based on increasing customer value by differentiatingan organisation s products or services and moving towardsthe customisation of its offering to the needs of individualcustomersz Leadership from the top and throughout the organisation tocreate momentumz Decentralised, devolved decision making by those closest tothe customer, to constantly renew and improve the offer tocustomers.

9 Development of people capabilities at all levelswith emphasis on self- management , team capabilities andproject-based activityz Support systems and culture which include performanceoperations and people management processes, aligned toorganisational objectives to build trust, enthusiasm andcommitment to the direction taken by the organisationz Fair treatment for those who leave the organisation andengagement with the needs of the community outside theorganisation an important component of trust andcommitment-based relationships both within and outside and Sung (2002) suggest that HPWOs are unique in that.

10 The organisation of production is based on the assumption thatcompetition is based not just on cost, but on incremental improvementsin the quality of the goods or services the division of labouris organised to ensure that all employees are in a position to contributetowards the overall Performance of the isHigh Performance Work Practices3no longer the sole repository of and also means that they[the workers] must acquire the social and problem-solving skillsrequired for the management of production, in addition to the technicalskill required for their immediate work tasks.